Is this a good buy for East Point, GA?
Hi there,
Found what appears to be a great house for our 5th investment property - a 5bd/2bath a few blocks from MARTA (Atlanta's "subway") and 2 stops from the airport. There is an upstairs loft with two additional rooms that could be used as bedrooms or a second living room + bedroom. House is a 1920s 2 story brick in the Jefferson Park area of East Point (Atlanta) on Harris st, near the medical center.
They were asking $99.9k and we agreed on $90k. ARV: $120k(?). It needs $10-15k of work to be rentable as all of the electrical needs to be replaced.
We rent exclusively to commuting airline personnel so the main concerns are their safety, space, proximity to airport and public transit.
When I run the numbers, they work BUT this is a bigger project and rougher area than we've ever dealt in. We've also heard horror stories about East Point bldg inspectors - very nit picky and hard to work with. The house next door is boarded up but everything else in the area looks solid, no bars, well kept. They refuse to come down any more on price. Should we take the leap or keep looking?
| Cost Assumptions | ||
| Purchase Price | $ 90,000 | |
| Improvements | $ 15,000 | |
| Closing Costs | $ 4,500 | |
| Total Cost | $ 109,500 | |
| ARV | $ 120,000 | |
| Revenues | Monthly | |
| Rental Income | $ 2,400 | |
| Vacancy/Loss Rate | 25% | |
| Vacancy/Loss Value | $ (600) | |
| Gross Income | $ 1,800 | |
| Expenses | 30% | |
| Net Income | $ 1,260 | |
| Cap rate | ||
| Gross Rent | Monthly | $ 2,400 |
| Annually | $ 28,800 | |
| Effective Gross Rent (minus vacancies) | $ 21,600 | |
| NOI (Effective Gross Rent Minus Operating Overhead) | $ 21,112 | |
| CAP rate = NOI/Total Acquisition Costs. GOAL: Cap rate of at least 5% | 19% |